Jobless rate hits record high in eurozone

Date: January 10 2013

Marcus Bensasson, Athens

THE euro-area jobless rate rose to a record in November as the fiscal crisis and tougher austerity measures deepened Europe's economic troubles.

Unemployment in the 17-nation region rose to 11.8 per cent from 11.7 per cent in October, the European Union's statistics office in Luxembourg said on Tuesday. That's the highest since the data series started in 1995 and in line with the median estimate of 27 economists in a Bloomberg News survey.

Tuesday's jobless report showed that 18.8 million people were unemployed in the euro area in November, up 113,000 from the previous month. At 26.6 per cent, Spain had the highest jobless rate in the currency bloc. Germany's jobless rate was 5.4 per cent and France's stood at 10.5 per cent. Austria had the lowest rate at 4.5 per cent.

The data also showed that youth unemployment was at 24.4 per cent, with Spain's rate more than double that at 56.5 per cent.

Adopting a positive tone, the president of the European Commission, Jose Manuel Barroso, said on Monday in Lisbon that ''the existential threat against the euro has essentially been overcome''.

''In 2013 the question won't be if the euro will, or will not, implode,'' he said.

International Monetary Fund managing director Christine Lagarde was not so sanguine, saying on Saturday that failure to find a solution to the euro area's troubles, and the US debt-ceiling debate, will result in a ''major world economic crisis''.

The euro-area economy has shrunk for two successive quarters and economists foresee a further decline in gross domestic product in the final three months of last year, forcing companies to cut costs by slashing jobs. The European Central Bank estimates contractions of 0.5 per cent and 0.3 per cent in 2012 and 2013.

''In the southern areas of the eurozone, demand is very weak and therefore there is no way to see fundamental improvement in labour-market conditions,'' said Uwe Duerkop, an economist at Landesbank Berlin.

''There might be some stabilisation in the labour market in the second half of the year where one can expect this trend of growing unemployment numbers to stop, but that's not the story for the moment.''

Spanish banks are reducing their staff. BFA-Bankia, the biggest Spanish lender set to receive European bailout funds, will cut about 6000 jobs, or more than a quarter of its workforce.

Banco Santander plans to cut 3000 jobs in its Banesto unit as part of its buyout plan, Cinco Dias newspaper reported on January 4.

In France, Peugeot SA announced on December 12 that it would eliminate an additional 1500 jobs by 2014, on top of 8000 job cuts announced in July. Germany's Siemens AG said on December 19 it was eliminating 1100 jobs at two energy units in Germany.

Europe's economic malaise is deepening as governments across the region impose budget cuts to narrow their fiscal deficits.

BLOOMBERG, NEW YORK TIMES

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